Assessment u/s 153A - unexplained share applications - reference to incriminating material - Held that:- Perusal of the assessment order reveals that the AO has not referred to any incriminating material while making the additions but has rather relied on the statement of Mr SK Gupta and has doubted the genuineness of the transaction as well as the creditworthiness of the share applicants.
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CIT (appeals) has also not made any linkage of the impugned addition to any incriminating material f .....

- DELHI HIGH COURT) we find that the addition has been wrongly added to the income of the assessee. - Decided in favour of assessee. - ITA No. 5202/Del/2013 - Dated:- 5-4-2017 - SHRI N.K. SAINI, ACCOUNTANT MEMBER, AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Assessee : Sh. Salil Aggarwal, Adv. Sh. Shailesh Gupta, CA For The Revenue : Ms Jyoti Kumar, CIT DR ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER: This appeal has been preferred by the assessee against the order of the CIT (A)-I .....

s to various entities including the assessee s group were maintained and it also included the name of assessee s counsel, one Mr. AS Aneja, who is alleged to have acted as a conduit in providing accommodation entries between Mr SK Gupta and the assessee s group companies. Subsequently, search and seizure operation u/s 132 of the Income Tax Act, 1961 (the Act ) was carried out on 5.1.2009 in M/s Taneja-Puri Group of cases. The case of the assessee was also covered u/s 132(1) of the Act. Simultane .....

ing total income of ₹ 1,10,860/- was filed on 31.3.2010. Original return in this case had also been filed at a total income of ₹ 1,10,860/-. The Assessing Officer completed the assessment vide order dated 31.12.2010 u/s 153A r/w section 143(3) of the Act at an income of ₹ 49,73,960/- after making the following additions/disallowances:- i) Unexplained credit on account of share application money being accommodation entries - ₹ 45,00,000/- ii) Disallowance of 80% of securit .....

rity expense and telephone expenses. 4. Now, the assessee has approached the ITAT and has raised the following grounds of appeal:- 1. That the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in sustaining an assessment made under section 153A/143(3) of the Act at an income of ₹ 49, 73, 960/ as against returned income of ₹ 1,10, 860/-. 2. That the learned Commissioner of Income Tax (Appeals) ignored the basic fact that the additions made were be .....

s SJ Securities P. Ltd. on account of share application money, ₹ 15, 00, 000/- were received from M/s Champs Finvest P. Ltd. on account of share application money, ₹ 5, 00, 000/- were received from M/s VA Foods P. Ltd. on account of share application money, and all the necessary details regarding the said transactions were filed before learned DCIT and CIT (A) as well, which were totally ignored and arbitrarily brushed aside by both the lower authorities, thus, addition so made and s .....

s, thus, his statement cannot be relied upon for making any addition. 6. That further the learned Commissioner of Income Tax (Appeals) has further erred in law and on facts by ignoring the fact that no opportunity was provided to the assessee to cross-examine Shri S.K. Gupta and thus, the addition so made and sustained on the basis of his alleged statement has no legs to stand and is liable to be deleted as such. 7. That the learned Commissioner of Income Tax (Appeals) has erred in law and on fa .....

u/s 153A/143(3) of the Act as no incriminating material was found during the course of search proceedings and the assessment for the impugned Assessment Year had attained finality on the date of search. It was submitted by the Ld. authorised representative that the assessing officer had relied only on the statements recorded during the search proceedings and no incriminating material found during the course of the search had been linked to the addition. Ld. Authorised Representative relied on th .....

ght to place reliance on the judgment of the Hon'ble Delhi High Court in the case of Anil Kumar Bhatia reported in 352 ITR 493 (Del). 7. We have carefully considered the material placed before us and the issue involved. Section 153A of the Act provides that where a search is initiated u/s 132 of the Act, the AO shall assess or reassess the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search is conducted or requi .....

ar return had been filed and the assessment order was passed u/s 143(3) of the Act and that no material has been found during the search to justify the addition. In our considered opinion section 153A does not authorise the making of a de novo assessment in this particular assessment year. While under the first proviso, the AO is empowered to frame assessment for six years, under the second proviso only assessments which are pending on the date of initiation of search abate. The effect is that c .....

disclosed income unearthed during search and cannot include items which were disclosed in the original assessment proceedings. 8. It is seen on facts that the original assessment was completed u/s 143(3) on 31.12.2007 and nothing further was required to be done by the AO and as no material was found during the search, the addition has no feet to stand. It will also be worthwhile to reproduce Para 37 of the judgment of the Hon ble High Court of Delhi in the case of CIT Central - III vs. Kabul Cha .....

ous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' 'of the aforementioned six years in separate assessment .....

t "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings '(i.e. those pending on the date of search) and the word 'reassess' to completed .....